Car-rental insurance: to buy or not to buy?

MarshallLoeb

NEW YORK (MarketWatch) -- It's a question many of us wrestle with every time we reach the counter of a car-rental agency: Do I really need rental insurance? Unfortunately, there is no simple answer. For some, rental insurance is a waste of money; for others, it can mean the difference between paying out thousands of dollars for repairs and walking away free of any obligation.

If you're confused about the level of coverage you need when renting a car, take the time to review these six tips from the National Association of Insurance Commissioners:

Review your policies. Rental agencies typically offer four types of insurance: collision damage waivers (also known as loss damage waivers), liability insurance, personal accident insurance and personal effects coverage. Drivers who have comprehensive and collision coverage on their cars can usually forgo collision damage waivers. If your auto insurance already offers liability protection, you can probably afford to skip the liability insurance. Personal accident insurance should be purchased separately only if you are not adequately covered by your car insurance or health and disability insurance. And personal effects coverage is generally not required if you already have renters or homeowners insurance. If you have any questions about your level of insurance coverage, review your policies or consult with your insurance agent before renting a car.

Buy a low-fee insurance rider. If you find that your auto insurance policy does not provide rental-car coverage, you could save money by requesting an "insurance rider" from your insurance company rather than purchasing additional coverage through a rental agency, according to the NAIC.

Check your credit-card coverage. Many credit cards now offer some level of collision and theft protection. But don't assume that means you won't need additional insurance. In most cases, the coverage provided by credit cards is "secondary" or supplemental, meaning it only kicks in after your auto insurance or car-rental insurance has been used up. The NAIC recommends calling your credit-card provider to determine your level of coverage.

Beware when traveling for business. It's important to keep in mind that you're personal auto insurance policy may not apply if you're traveling on business. To ensure that you have the level of coverage you need, talk to your employer.

Recognize that the rules for long-term rentals are different. The level of coverage provided by your personal auto insurance for rental cars may change if you rent for longer than a week, warns the NAIC. Be sure to consult with your auto insurance provider before refusing the coverage offered by rental agencies.

Get car rental insurance if you're not already covered. If you don't have personal auto insurance and your credit card doesn't provide any benefits, the NAIC says it pays to shell out the cash for a collision damage waiver and liability insurance when renting a car.

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